First Plaintiff v Defendant

1 Reasons for judgment were delivered in relation to the claims and counterclaims in this proceeding on 22 August 2019, (Principal Reasons).[1] Orders were made on 6 September 2019, including orders providing for the filing of further evidence and submissions in relation to the issues that remained for determination.

(a) Whether judgment for the debts held to be owing by the first plaintiff (Weatherbeeta UK) and the second plaintiff (Weatherbeeta USA) to the defendant/plaintiff by counterclaim (Bates Australia),[2] and interest, should reflect United States dollars or Australian dollars, and if United States dollars, whether the amounts should be converted to Australian dollars at the date of judgment.

(b) Whether the interest rate to be applied to the debts should be the rate fixed under the Penalty Interest Rates Act (1983) (Vic) (Rates Act), being 10 per cent per annum,[3] as Bates Australia contended, or a lower rate, as the plaintiffs contended.

(c) What orders regarding costs should be made in relation to the claims and counterclaims, including:

(i) Whether Bates Australia's rejection of the plaintiffs' settlement proposal set out in a letter dated 24 September 2018 (Settlement Offer) should result in an order being made that Bates Australia pay the plaintiffs' costs of the proceeding from and including 28 September 2018 on an indemnity basis.

(ii) Whether a separate order should be made in respect of the costs of Bates Australia's injunction application made by summons filed on 14 July 2017 which resulted in consent orders being made by Almond J on 31 July 2017 restraining the plaintiffs until trial or further order from selling or dealing with the plaintiffs' remaining stock of Bates Australia's products.

(d) Whether the $330,000 paid into Court by the plaintiffs by way of security for costs, together with interest, should be paid out to the plaintiffs or either of them.

(e) What orders should be made in relation to the parties' costs of and incidental to the hearing and determination of these issues.

(a) Judgment for the amount of the debts, and interest, should reflect United States dollars as at the date of judgment, but be converted to Australian dollars as at that date.

(b) Interest on the debts should be allowed at interest rates lower than the 10 per cent per annum interest rate fixed pursuant to the Rates Act, being rates calculated by reference to the monthly Reserve Bank of Australia Retail Deposit and Investment Rates for savings accounts over AU$10,000 (Commercial Rates).[4]

(c) As to the costs of the proceeding:

(i) The plaintiffs should pay Bates Australia's costs of and incidental to the plaintiffs' claims in the proceeding up to and including 6 September 2019, to be taxed on a standard basis if not agreed.

(ii) The plaintiffs should pay 5 per cent of Bates Australia's costs of and incidental to Bates Australia's counterclaim in the proceeding up to and including 6 September 2019, to be taxed on a standard basis if not agreed. This is an apportionment made to take account of Bates Australia's success in respect of its debt claims in the counterclaim against the plaintiffs.

(iii) Except for the costs of Bates Australia's application for interlocutory relief made by summons filed on 14 July 2017, Bates Australia should pay 95 per cent of each of the plaintiffs' costs of and incidental to Bates Australia's counterclaim in this proceeding up to and including 6 September 2019, to be taxed on a standard basis if not agreed. This is an apportionment made to take account of each of the plaintiffs' success in defending the claims the subject of the counterclaim other than in respect of the debt claims.

(iv) Bates Australia should pay each of the plaintiffs' costs of and incidental to Bates Australia's application for interlocutory relief made by summons filed on 14 July 2017, to be taxed on a standard basis if not agreed.

(v) Absent agreement between the parties, at this point no order should be made regarding the $330,000 paid into Court by the plaintiffs by way of security for costs.

4 I will hear from the parties regarding the costs of the hearing and determination of the issues the subject of these reasons.

DEBTS AND INTEREST - UNITED STATES DOLLARS OR AUSTRALIAN DOLLARS

5 It was common ground that the Court can give judgment in a foreign currency, which is well established and undoubtedly correct.[5]

6 The debts comprised previously invoiced United States dollar amounts owed to Bates Australia by each of Weatherbeeta UK and Weatherbeeta USA, and Bates Australia was successful in its claim for these United States dollar amounts.

7 The plaintiffs ultimately accepted Bates Australia's contention that it was appropriate for the judgment to be reflected in United States dollars at the date of judgment. I agree. Because the debts are in United States dollars it is also appropriate that interest be calculated in the same currency on the amounts owed. This also became a matter of common ground between the parties.

8 As to the form of the judgment, Bates Australia submitted that, consistent with the decisions of Fullagar J in ITC Distribution Ltd v Filmpac Holdings Ltd (ITC)[6] and Byrne J in Vlasons,[7] the United States dollar amounts for the debts and interest at the date of judgment should be specified in the judgment, but that the terms of the judgment should be expressed to be in respect of the Australian dollar equivalent of those amounts on the day of judgment.

9 Although aspects of the plaintiffs' written submissions appeared to contest Bates Australia's position on this topic, in oral submissions counsel for the plaintiffs clarified the position and confirmed that the plaintiffs no longer took issue with Bates Australia's approach.[8]

10 The substance of that which was proposed by Bates Australia is consistent with the approach taken in ITC and Vlasons. For the reasons given by Byrne J in Vlasons,[9] I respectfully agree that it is open to the Court to give judgment in a foreign currency, converted to the Australian dollar equivalent amount as at the date of judgment, where the party in whose favour judgment is to be given elects to do so.

11 Bates Australia has so elected and, subject to addressing the precise form of order with the parties, judgment for the debts and interest should be given in favour of Bates Australia by reference to the Australian dollar equivalent of the United States dollar amounts on the date of judgment.

12 There was no dispute between the parties regarding the exchange rate to be applied in order to ascertain the Australian dollar equivalent amounts. They agreed that the exchange rates referred to in Mr Sutherland's affidavit sworn on 2 October 2019 were the rates sourced from the Reserve Bank of Australia, and that exchange rates from the same source should be used for calculating the Australian dollar equivalent amounts as at the date of judgment. This was an appropriate position for the parties to take and it will be left to the parties to calculate and provide the Court with the correct amounts as at 31 October 2019.

INTEREST SHOULD BE CALCULATED AT A RATE LOWER THAN THE 10 PER CENT PER ANNUM RATE FIXED PURSUANT TO THE RATES ACT

13 The parties agreed that s 58(1) of the Supreme Court Act 1986 (Vic) (the Act) applied, and that interest should be awarded on the debts owed to Bates Australia from the time that each amount was payable,[10] and at an interest rate not exceeding the rate for the time being fixed under s 2 of the Rates Act.

14 It was common ground that the interest rate fixed under the Rates Act for the relevant period was 10 per cent per annum.

15 The issue between the parties was whether the 10 per cent rate should be applied. Bates Australia said it should; the plaintiffs said it should not.

16 Briefly, and in substance, the plaintiffs submitted that:

(a) Section 58(1) of the Act does not require 'good cause to the contrary [being] shown' before the Court's discretion to fix an interest rate lower than the rate fixed by the Rates Act is enlivened.

(b) The discretion to award interest must be exercised judicially. The purpose of an award of interest is to compensate and the guiding principle by which courts award interest is that it is intended to compensate a party for the detriment it has suffered by being kept out of its money. Its purpose is not to punish a party.

(c) It is well established that if a court gives judgment in foreign currency, the applicable interest rate is the rate applicable in the foreign currency and not the rate fixed under the Rates Act. That is the 'usual rule', the evidence does not establish any basis for departing from the rule, and 'gaps' in the evidence of Bates Australia's Ms Finch favour the position of the plaintiffs.

(d) Each case depends on its own facts, and other cases are distinguishable.

(e) Applying the 10 per cent rate would overcompensate Bates Australia, provide it with a windfall, and work an injustice to the plaintiffs. This was said to be supported by, among other things: the debts being in United States dollars; materially lower interest rates in the United States; Bates Australia's practice of depositing United States dollar amounts in a non-interest bearing United States dollar bank account in Australia; significantly lower deposit interest rates in Australia; and the absence of evidence that Bates Australia needed to borrow additional funds, whether at the overdraft rate for the United States dollar bank account in Australia referred to in the evidence, or at all.

(f) A United States rate of 0.81 per cent should be applied instead, compounding monthly. Assuming a judgment date of 31 October 2019, this would result in an award of interest of US$7,503.20 - being US$4,257.13 in respect of the debts owed by Weatherbeeta UK and US$3,246.07 in respect of the debts owed by Weatherbeeta USA.

(g) Relevant retail and deposit monthly investment rates for the period January 2017 to August 2019 as recorded by the Reserve Bank of Australia and set out in the evidence of Mr Bull ranged between 1.75 per cent and 2.15 per cent per annum, and were significantly lower than the 10 per cent per annum under the Rates Act. It was submitted that these rates clearly supported the contention that the 10 per cent interest rate materially exceeded the rate of return that could have been obtained on the amount of the debts over the relevant period.

(h) The plaintiffs' position was supported by the decision in Westpac Banking Corporation v The Ship MV "Stone Gemini" [1999] FCA 595 and Ying Mui & Ors v Frank Kiang Ngan Hoh (No 3) [2017] VSC 29; and the decisions in Gujarat NRE Coke Ltd v Wollongong Coal Ltd; Wollongong Coal Limited v Gujarat NRE Coke Ltd (Gujarat)[11] and Talacko[12] were distinguishable.

17 The rate of 0.81 per cent per annum[13] was based on what was described as a 'Rate Cap' obtained from the website of the US Federal Deposit Insurance Corporation. Mr Bull's evidence was that the spreadsheet exhibited to his affidavit listed a 'National Rate', which was '... a simple average of interest rates paid by all insured US depositary institutions. The "Rate Cap" is determined by adding 75 basis points to the National Rate ...'.[14] The 0.81 per cent figure was recorded in the spreadsheet as the 'Rate Cap' for what appeared to be described as 'savings' that were 'Non-Jumbo Deposits'. The spreadsheet recorded the 'National Rate' and 'Rate Cap' figures for the period from 2 January 2017 to 31 December 2017 only. The 'National Rate' for that period was recorded as a consistent 0.06 per cent, and the 'Rate Cap' was recorded as a consistent 0.81 per cent, revealing that the arithmetic was consistent with Mr Bull's evidence that the Rate Cap is derived by adding 75 basis points to the 'National Rate'.

18 Bates Australia's position was different. In substance it submitted that:

(a) Section 58(1) of the Act operates so as to require good cause to be shown to the contrary before the Court's power to award an interest rate lower than that fixed by the Rates Act will be enlivened.[15]

(b) Bates Australia is entitled to interest and the 10 per cent per annum rate should apply.

(c) Section 2 of the Rates Act requires the rate to be fixed at a rate which, among other things, reflects rates that in the opinion of the Treasurer reflects prevailing commercial rates of interest.[16] The exercise of any discretion must be informed by the terms of the Rates Act.

(d) The plaintiffs bear the onus of establishing that the 10 per cent rate should not be applied.

(e) The settled practice in Victoria is that unless there is good cause shown to the contrary, the statutory maximum rate is used.[17]

(f) The rate of interest awarded may well exceed proper or ordinary commercial rates, and the purpose of an award of interest under s 58(1) of the Act goes beyond a form of basic recompense to a plaintiff for being kept out of money while its actions are resolved in court.[18]

(g) There is no prima facie positon or rule in relation to foreign currency judgments or amounts.

(h) When regard is had to how Bates Australia dealt with United States dollars received, its Australian bank accounts, its banking practices, other aspects of its business operations, its strong connection with Australia, and its absence of connection with the United States, it is apparent that it is appropriate to look to the 10 per cent per annum interest rate and inappropriate to look to rates from the United States.

(i) Bates Australia's position was supported by the decisions in Gujarat[19] and Talacko,[20] and other decisions were distinguishable on their facts.

19 Upon its proper construction, s 58(1) of the Act does not by its terms require 'good cause [being] shown to the contrary' in order to enliven the Court's power to fix an interest rate lower than that fixed by the Rates Act.

20 The language of the section is clear, as is apparent from the reasons of the Full Court in Clarke v Foodland Stores Pty Ltd (Clarke).[21] As the Full Court there observed:

... that power to fix a lesser rate does not depend upon 'good cause [being] shown to the contrary'; it depends upon the simple fact that s.58(1) purports to prescribe only a maximum rate. By directing the court to allow interest 'at a rate not exceeding' the rate fixed under s. 2 of the Rates Act the court is otherwise left at large and, to that extent, has a discretion in the matter. It is, of course, a discretion to be exercised judicially but, by the same token, such a discretion may not be circumscribed by attempts to define what must or must not be taken into account when the discretion falls to be exercised: ...[22]

21 The purpose of the statutory power to award interest has been addressed in many cases.

22 In Clarke,[23] the Full Court observed as follows:

It may be accepted that the purpose of the statutory power to allow interest is to compensate the plaintiff for being kept out of his money, although not because he has on that account lost the opportunity to invest it, but because he has thereby been deprived of its use_._ This has been laid down now by a unanimous High Court in relation to interest on damages for personal injuries ...

The decision in Gogic's Case no doubt governs interest under our s. 60, but there seems no reason why the same is not equally so under s. 58. It follows, then, that as interest is to compensate the plaintiff, it is not to be allowed simply for the purpose of penalising the defendant for not having paid earlier, although, of course, an award of interest may have that effect: Bennett v. Jones (1977] 2 N.S.W.L.R. 355, at p. 370, per Moffitt P., Wheeler v. Page and Harris (1982) 31 S.A.S.R 1, at p. 4, De Girolamo v. South Australia (1991) 56 S.A.S.R. 40, at pp. 44-5. Allowing interest at proper commercial rates may well encourage defendants not to delay litigation for the sake of it, but it appears from the authorities that that is not the purpose for which the statutory power to allow interest is now recognised as having been conferred; cf. Ruby v. Marsh [1975] HCA 32; (1975) 132 C.L.R. 642, at pp. 652-3, per Barwick C.J.

On the other hand, the discouragement of tardiness on the part of defendants appears to have been an element in Parliament's enacting of the Rates Act in 1981 in Victoria: see Hansard, Legislative Assembly, 28 April 1981, p. 7614. That the maximum rate allowed under the Supreme Court Act should be the rate fixed from time to time under s. 2 of what is called 'the Penalty Interest Rates Act' - and there is no reason to suppose that that Act was misnamed - does at least suggest that that maximum rate may, at least under certain conditions, include an element of penalty which, on the foregoing cases, would not be appropriate when interest is being allowed under the Supreme Court Act. To allow interest at the maximum rate permitted under s. 58 might, at certain times, go beyond mere compensation of the plaintiff - and it seems that this is one of those times; for the court was told that at present the rate fixed under s. 2 of the Rates Act is 13 per centum, which is significantly more than might be obtained by a defendant who prudently invested the money until trial and likely to be beyond 'commercial rates', however defined.

In other words, the use of the maximum rate permitted under s. 58, if awarded over the whole of the period allowed by the section, might be a step that would have worked injustice to Foodland in this case; and that is why we suggest that the interest rate can be relevant to the outcome in this case, even though no separate challenge was mounted, directed specifically at the rate adopted below.

23 In a different context the Court of Appeal in Hartley Poynton Ltd v Ali[24] (Hartley Poynton) said as follows regarding aspects of those observations:

1. To this the respondent also relied on the passage in Clarke v. Foodland,[25] referring to s 58 of the Act, where it was said, as has been said on many other occasions, that the object of the section 'is to compensate the plaintiff for being kept out of his money'. But one must be wary of the reason why that statement has been repeated, for it has rarely been in circumstances where the damages have included damages for lost opportunity. One must also notice that the full proposition in Clarke[26] was that the object to compensate plaintiffs for being kept out of their money, 'although not because he has on that account lost the opportunity to invest it, but because he has thereby been deprived of its use'. The respondent said that there was no necessary equivalence between interest on the principal sums and lost opportunity damages.
2. Consequently in this area of the law one should be cautious about incanting general propositions without at the same time properly considering how they work in practice. ...

1. Again, in claims for interest under ss58 - 60 of the Act, the principles so far stated with respect to interest under similar provisions has been generally recognised as requiring no more than compensation for being kept out of the moneys claimed but, so far as Victoria is concerned, the High Court has at least recognised that different considerations may well apply in this State because of the specific provisions contained in the Penalty Act: see Grincelis v. House[27]. Although I do not have sufficient knowledge to speak with certainty as to every other state and territory provision, it would seem that over the years since 1983 the Victorian rate so prescribed has been higher than that applicable in other states and territories and reflects a policy that interest otherwise payable pursuant to statutory provisions, whether under the Act or elsewhere, should, where appropriate, do more than merely place the plaintiff in a position formerly held before the relevant claim was made. Again, speaking in the broadest of terms, the prescribed rate has usually been well in advance of what might be earned by its investment on the money market on a conservative basis, whether at short term or long term rates, and, more often than not, is in excess of what might be expected to be obtained by way of return on other conventional investments. On the other hand, it has usually been some points below the current mortgage and overdraft rates. The Penalty Act's object, as I perceive it, has been in part to encourage the early settlement of litigation (cf. Grincelis at 329 [16]), but it may be seen to have the broader purpose of ensuring that recalcitrant defendants, owing money or otherwise subject to an award of damages, do not withhold payments properly sought by plaintiffs upon the selfish basis that in the meantime they may without risk invest moneys so owed in a manner which will give them not merely sufficient to repay successful plaintiffs with interest under the Act but with an element of profit which might fairly be perceived as wrongfully obtained. This has ordinarily given Victorian courts a degree of flexibility in relation to the payment of interest which may not exist in other jurisdictions where the relevant rates are only broadly sufficient to recompense plaintiffs for being kept out of their money while their actions are fought or delayed, as frequently used to occur.
2. Nevertheless the pattern in Victoria has been that, unless good cause be shown, successful plaintiffs are ordinarily awarded interest at the rate prescribed under the Penalty Act without too fine a regard for these distinctions and I would assume that the plaintiff in the present case is entitled, at the least, to interest on the moneys invested and ordered to be repaid, although that would bring in a sum in excess of what it might have been invested at, as the quotation from Clarke suggests. The seemingly more difficult issue is whether the rates prescribed by the Penalty Act should be awarded on top of the damages reflecting the various loss of opportunities which formed a significant part of the primary judgment sum awarded to the plaintiff. Here again I would see no reason ordinarily to deprive a party of interest at the rates prescribed unless it was unfair to do so and in particular unless it could be shown that there was in effect double counting by awarding interest on those damages.

24 In Hodgson,[28] Vickery J observed that the 'settled practice in Victoria' is that the 'statutory maximum' is used unless a good reason otherwise is shown:

However, the settled practice in Victoria is that, unless good cause to the contrary is shown, the statutory maximum rate is used. In Hartley Poynton Ltd v Ali Ormiston JA reasoned: 'The pattern in Victoria has been that, unless good cause be shown, successful plaintiffs are ordinarily awarded interest at the rate prescribed under the Penalty Act without too fine a regard for these distinctions'.[29] In Johnson Tiles Gillard J likewise observed_:_ 'The practice has evolved in this State to apply as a general rule the rate fixed pursuant to the Penalty Interest Rates Act ...'.[30] The statutory rate was described as a 'benchmark' by Fullagar, Marks and J.D Phillips JJ in Clarke v Foodland Stores Pty Ltd[31] and in Kalenik v Apostolidis (No. 2) Hargrave J said to like effect: 'As a general rule, the starting point is the penalty rate ... the penalty rate is routinely awarded by the Court'.[32]

25 To the extent that Bates Australia maintained its submission that, upon its proper construction, s 58(1) of the Act requires 'good cause [being] shown to the contrary' in order to enliven the Court's power to fix an interest rate lower than that fixed by the Rates Act, I do not accept that submission. In this regard it is sufficient to refer to the language of the section and to the observations of the Full Court in Clarke regarding its proper construction, which are referred to in paragraph 20 above.

26 Although the plaintiffs initially submitted that there was a 'rule' that where the Court gives judgment in a foreign currency the applicable interest rate is or must be '... the rate applicable for that foreign currency ... and not the rate ...' under the Rates Act, they rightly retreated from this rigid position during the course of junior counsel's able argument.[33] Rather, it was put that the position was more nuanced and that the cases in which interest rates have been fixed at rates associated with the particular currency in question is reflective of the application of a compensatory approach to the selection of interest rates, which, so it was submitted, was applicable here.

27 It is correct that there is no rigid or fixed 'rule' or principle of law that mandates that interest rates must be referable to the particular country of the foreign currency in question. The power under s 58(1) of the Act is discretionary, with such discretion to be exercised judicially having regard to the particular facts and circumstances under consideration. As Giles J observed in a related context in Swiss Bank Corporation v State of New South Wales:[34]

What are the appropriate rates depends on all the circumstances, of which the currency of judgment is only one. It must be remembered that there ought not be a fixed rule, and there is always an exercise of discretion in the court ordering that there be included in the judgment interest, as s 94(1) says, 'at such rate as it thinks fit'.[35]

28 Each case depends on its own facts, and limited assistance is to be obtained from other cases involving different facts and circumstances at different times in varying jurisdictions. All of the cases referred to by the parties involved differing circumstances and do not materially assist, except perhaps to the extent that they underscore that circumstances of previous cases are of limited assistance.

29 In any event, even if there were considered or assumed to be a 'usual rule', practice, or prima facie position of applying interest rates referable to the country of the foreign currency in question, the result would not change in this case because the facts and circumstances here arising would displace any such position.

30 Having regard to the circumstances of this case, interest on the debts should not be fixed by reference to the United States rate of 0.81 per cent per annum or by reference to the 10 per cent per annum rate under the Rates Act. Rather, on the limited evidence before the Court regarding alternative interest rates, interest on the debts should be fixed at the Commercial Rates. That is, rates equal to the applicable monthly retail deposit and investment rates listed by the Reserve Bank of Australia for savings account over $10,000 as referred to in Mr Bull's evidence, but updated so as to include the rates for September and October 2019. I elaborate below.

31 Although the invoices for Weatherbeeta UK and Weatherbeeta USA were in United States dollars, and judgment is to be expressed in United States dollars converted to Australian dollars at the date of judgement, when these matters are considered in connection with, and as part of, the other facts and circumstances, it is apparent that Bates Australia's connection with the United States is limited, both in relation to the transactions in question and in its business operations and banking practices more generally. The following may be noted:

(a) The goods supplied to the first plaintiff, Weatherbeeta UK, were supplied in respect of the United Kingdom and distributed in the United Kingdom.

(b) Bates Australia is incorporated in Australia and has its headquarters in Australia. It is also operated by Australian principals and its shareholders are located in Australia.

(c) Bates Australia has never borrowed money in United States dollars or in British pounds.

(d) Whenever Bates Australia has required funds to support its business activities it has only borrowed money in Australia, and in Australian dollars.

(e) The process for payment in relation to goods supplied to Weatherbeeta UK and Weatherbeeta USA involved Bates Australia depositing amounts received in United States dollars into Bates Australia's Commonwealth Bank account in Australia, where the amounts were held in that account in United States dollars. The money held in that account did not accrue interest, whether in United States dollars or at all.

(f) The funds in the Bates Australia Commonwealth Bank account are used to pay local and overseas suppliers and otherwise used in connection with Bates Australia' s business activities in Australia. There was evidence that when Bates Australia uses funds from this account in connection with its activities in Australia and to pay suppliers locally, Bates Australia first converts funds into Australian dollars. How frequently and to what extent this occurs was not apparent on the evidence.

32 Given these circumstances, in my view it is not appropriate that the interest rates reflect the United States Rate Cap rate of 0.81 per cent per annum or the United States 'National Rate' of 0.06 per cent per annum (or any other United States related interest rate). Rather, reference should be had to the position in Australia, and Australian dollars, which is what best expresses Bates Australia's detriment for being kept out of, and not having the use of, its money.

33 As to why interest should be fixed at the Commercial Rates and not the 10 per cent per annum rate under the Rates Act, I make the following points.

34 First, as Hargrave J observed in Kalenik v Apostolidis (No 2):[36]

The rate of interest is always a matter in the discretion of the Court, subject to the proviso that it cannot exceed the rate prescribed under s 2 of the Penalty Interest Rates Act (the 'penalty rate').[37]

35 Second, to the extent that it was submitted by Bates Australia that a 'settled practice' in Victoria of awarding interest at the penalty rate necessitates following such a practice in this case, I do not accept that submission. As mentioned, the discretion is to be exercised having regard to the particular circumstances in question - as has occurred in all of the authorities in which reference has been made to the existence of a particular practice or approach in Victoria.

36 Third, the matters revealed by the evidence included the matters referred to in paragraph 31 above, and the following:

(a) United States dollars received by Bates Australia are held by Bates Australia in an Australian bank account that is non-interest-bearing.

(b) Although there was evidence regarding the overdraft interest rate on this account, Ms Finch did not suggest that the non-payment of the debts to date had resulted in the account being overdrawn or additional funds being required to be borrowed, whether pursuant to overdraft rates or otherwise - noting also that the documents produced showed a credit balance for this account for the period shown.[38]

(c) The 'overdraft' rate related to the United States dollar Commonwealth Bank account and Ms Finch's evidence was that Bates Australia only ever borrowed money in Australia and in Australian dollars when Bates Australia required funds to support its business activities.

(d) Bates Australia did not seek to lead any evidence regarding alternative commercial lending or deposit rates in response to that of the plaintiff.

37 Fourth, the purpose of an award of interest was helpfully explained by the Full Court in Clarke, and further elaborated on in Hartley Poynton. Whether or not one takes into account the object and purpose of the Rates Act, it is well accepted that what lies at the heart of the object or purpose of an award of interest is a compensatory focus, even though an award of interest may have some punitive effect.

38 Fifth, although Bates Australia did not seek to lead evidence regarding commercial interest rates in Australia, the plaintiffs did. This evidence came from Mr Bull and was in respect of the Commercial Rates earlier referred to.

39 Sixth, even though Bates Australia's United States dollar Commonwealth Bank account did not bear interest, as a result of the plaintiffs not paying the debts to date, Bates Australia has been kept out of its money and been deprived of its use.

40 Seventh, in the particular circumstances of this case there is a substantial disparity between the 10 per cent per annum rate under the Rates Act on the one hand and the Commercial Rates on the other - and an even greater disparity with the zero interest payable on Bates Australia's United States dollar Commonwealth Bank account.

41 Eighth, it was not submitted by the plaintiffs that they had shown good cause as to why no interest at all should be awarded, and any such submission would not have been accepted in any event. Put another way, it was common ground that some interest should be awarded. In this context, the difference between the parties related to the rate of interest.

42 Ninth, and as I have said, given the different facts and circumstances in this case, little and limited assistance is to be derived from the decisions in other cases, including the cases referred to in paragraphs 16(h) and 18(i) above, each of which is distinguishable and far from being on all fours with the facts under consideration.

43 Tenth, and to adopt the language of the Full Court in Clarke: having regard to the above, to allow interest at the maximum rate of 10 per cent per annum permitted under s 58 of the Act in the particular circumstances of this case would go well beyond compensating Bates Australia - and, in my view, unreasonably so - so as to have worked an injustice to the plaintiffs in this case.

44 The Commercial Rates of interest should be applied and not the 10 per cent per annum rate fixed under the Rates Act. The rates in evidence for the period will need to be supplemented so as to include the rates for September and October 2019.

45 The plaintiffs submitted that both parties were 'unsuccessful' and that the 'usual orders' would be that the plaintiffs pay Bates Australia's costs of the claim, and that Bates Australia pay the plaintiffs' costs of the counterclaim. They submitted that those orders should be 'netted off' such that each party bears its own costs up until and including 27 September 2018.[39]

46 Relying on the rejection of the Settlement Offer, which was contended by the plaintiffs to have been an unreasonable rejection, it was submitted that Bates Australia should pay the plaintiffs' costs on an indemnity basis on and from 28 September 2018.[40] They also submitted that Bates Australia should pay the plaintiffs' costs of the July 2017 injunction application.

47 During oral submissions the plaintiffs put a submission in the alternative to their primary submission regarding the 'netting off' approach. In broad terms that was to the effect that:[41]

(a) the plaintiffs pay Bates Australia's costs of the claim;

(b) the plaintiffs pay Bates Australia's costs of the counterclaim in respect of the debt claims;

(c) Bates Australia pay the plaintiffs' costs of the counterclaim except for the costs associated with the debt claims; and

(d) Bates Australia pay the plaintiffs' costs of the injunction application.

48 Bates Australia favoured a different outcome. It observed that the plaintiffs accepted that they had been unsuccessful in respect of their claim and submitted that Bates Australia was the successful party and the 'real winner', although this was recalibrated during oral submissions to a claim of being the 'relative winner'. This was said to be because it successfully defended the plaintiffs' claims[42] and recovered the debts on its counterclaim, although it acknowledged that most of its counterclaim failed, as it did. Bates Australia also emphasised the importance of the outcome of the litigation to the exercise of the Court's discretion, and characterised its broader counterclaim as defensive in nature.

49 Bates Australia submitted that in cases where, as here, there was '... a multiplicity of issues and mixed success has been enjoyed by the parties, a court may take a pragmatic approach in framing the order for costs, taking into consideration the success of the parties on an issues basis ...'.[43] It submitted that in such a case the order is framed primarily as a matter of impression and evaluation, rather than with arithmetical precision, having regard to the time occupied, the ambit of submissions made, and other relevant matters.

50 It was submitted that if this approach is adopted the plaintiffs should pay 30 per cent of Bates Australia's costs of the proceeding having regard to matters such as: the measure of success; the quantum of the debts; the failed defence of set off; the evidentiary overlap; and the desirability of avoiding the need for taxation of costs. During oral submissions Bates Australia indicated that if this kind of approach was adopted but the Court considered that '... the figure was too high, then it could come down', although it was submitted that any reduction ought only to be slight.[44] Bates Australia also submitted that no separate order should be made in relation to the injunction application and that, as with other reserved costs, they formed 'part of the mix' that had influenced Bates Australia to seek '... only 30% of its costs of the proceeding.'

51 Bates Australia submitted that the rejection of the Settlement Offer should have no impact on the question of costs, and that, having regard to the ultimate outcome, the terms of the offer, and other relevant circumstances, the rejection of the Settlement Offer was not, and had not been shown to be, unreasonable.

The Costs Discretion - Some Principles and Observations

52 Principles relating to the exercise of the Court's discretion in relation to costs have been addressed in many cases and are well known. In the present case there was no material dispute regarding any relevant matters of principle, and each of the parties referred to observations made in many of the same authorities. Having regard to the particular costs issues that fall to be determined, it is convenient and sufficient to refer to the following.

53 It is well settled that a guiding principle by which the Court's discretion as to costs is to be exercised is that the successful party is generally entitled to his or her costs, which was a point recently emphasised by the High Court in Northern Territory v Sangare (Sangare)[45] as follows:

The discretion as to costs

[24] It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation.[46] While the width of the discretion 'cannot be narrowed by a legal rule devised by the court to control its exercise',[47] the formulation of principles according to which the discretion should be exercised does not 'constitute a fetter upon the discretion not intended by the legislature'.[48] Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.[49]

[25] A guiding principle by reference to which the discretion is to be exercised - indeed, 'one of the most, if not the most, important' principle - is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party.[50] The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action.[51] But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour.[52] There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the 'just resolution of the real issues in civil proceedings with minimum delay and expense',[53] that might have been taken into account to justify refusing the appellant an order for its costs.

54 In Chen v Chan,[54] the Court of Appeal helpfully observed as follows:

Relevant principles

[10] The contentions of the parties raise a number of questions relevant to costs orders on appeal. The principles relevant to these questions can be summarised as follows:

(1) The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.[55]

(2) The Rules of Court[56] permit significant flexibility in determining questions of costs. In particular, the court is entitled to examine the realities of the case and will attempt to do 'substantial justice' as between the parties on matters of costs.[57]

(3) Where there is a multiplicity of issues and mixed success has been enjoyed by the parties,[58] a court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.[59]

(4) A court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.

(5) Where a court determines to make an order apportioning costs, then it does so primarily as 'a matter of impression and evaluation,'[60] rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.

(6) Where a number of parties have had the same representation, there is a 'rule of thumb'[61] as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted.

(7) Usually, an order for costs will be made on a party/party basis.[62] But an order for costs on a solicitor/client or indemnity basis may be made where special or unusual circumstances have been demonstrated,[63] for example, by establishing misconduct in the proceeding, that the proceeding was brought for an ulterior purpose, or that it was patently unreasonable to institute, or maintain, the proceeding. Special circumstances may also include the making of an allegation of fraud which is not proved.[64]

55 In Nom De Plume Nominees Pty Ltd v Fingal Developments Pty Ltd,[65] these observations were succinctly reinforced by the Court of Appeal in this way:

[13] The relevant principles for the resolution of the question as to the costs of the appeal, and in respect of any apportionment of the costs of the trial, are those set out by this Court in Chen v Chan.[66] In short, for present purposes, while the general rule is that costs should follow the event, where there is a multiplicity of issues and mixed success has been enjoyed by the parties, the court may take a pragmatic approach in relation to costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Such an approach will be primarily a matter of impression and evaluation.

56 More recently, in Diakou v Rouse,[67] the Court of Appeal observed that:

[48] Section 24(1) of the Supreme Court Act 1986 confers on the Supreme Court a wide discretion in deciding questions of costs.[68] However, that discretion must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation.[69] There are well-established principles that provide guidance for the exercise of the discretion and avoid it being exercised in an arbitrary or inconsistent manner.[70]

[49] One such well-established principle is that costs usually follow the event, that is, that the unsuccessful party is usually ordered to pay the successful party's costs. Recently, in Northern Territory v Sangare, the High Court said the following about that principle:

[50] Consistent with this principle, where the outcome of the proceeding is such that it cannot be said that one party has been successful and the other has been unsuccessful, it may be appropriate that there be no order as to costs.[72] That is also the case in a proceeding where its subject matter or the relief sought are such that neither party can be said to have succeeded.[73] However, the conduct of one of the parties in relation to the litigation may be such as to warrant an order for costs being made against that party.

57 With respect to the potential effect of the rejection of a Calderbank offer, although lengthy, it is convenient and sufficient to refer to and set out the well-rehearsed passages from the Court of Appeal's reasons in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2]:[74]

Calderbank offers and the award of indemnity costs

1. Calderbank letters and the consequences that flow from them have been considered by the Trial Division of this Court in a number of cases: see M T Associates Pty Ltd v Aqua-Max Pty Ltd (No.3);[75] Clarke v ABC;[76] Pearson v Williams;[77] Nolan v Nolan;[78] and Aljade & MKIC v OCBC (OCBC).[79]
2. One of the seminal contributions to the law on indemnity costs was the judgment of Sheppard, J. in Colgate Palmolive Company v Cussons Pty Ltd.[80] Amongst the circumstances listed by his Honour as having been thought to warrant the exercise of the discretion to award indemnity costs was -

...an imprudent refusal of an offer to compromise.[81]

So widely has this been accepted that the proposition has been advanced that a Calderbank offer gives rise to a presumption that the party rejecting the offer should pay the offeror's costs on an indemnity basis if the offeree receives a less favourable result.[82]

1. In OCBC, however, Redlich J rejected the notion of any such presumption, holding that the weight of authority -

strongly points to an approach that involves no preconceptions about when the rejection of a Calderbank offer should lead to the making of a special costs order. It will do so where it is concluded that the rejection of the offer was unreasonable.

We respectfully agree with his Honour's conclusion. We note, as did his Honour, that the notion of such a presumption has been decisively rejected by the New South Wales Court of Appeal (most recently in Brymount Pty Ltd v Cummins (No. 2)[83]), by the Federal Court and by the Queensland Court of Appeal.

1. The correct approach, in our view, is to treat the rejection of a Calderbank offer as a matter to which the Court should have regard when considering whether to order indemnity costs. As Gyles JA stated in SMEC Testing Services Pty Ltd v Campbelltown City Council:[84]

...In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rules as to costs...

1. In Grbavac v Hart,[85] Hayne JA cited with approval what the New South Wales Court of Appeal had said in Maitland Hospital v Fisher (No.2)[86] about the policy rationale underlying the availability of special orders for costs where offers of compromise are rejected. Like his Honour, we think that what was there said is equally relevant to the exercise of the costs discretion where a Calderbank offer has been made. The policy objectives were said to be:

(1) To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff's real claim which can be placed before its opponent without risk that its 'bottom line' will be revealed to the court;

(2) To save the public costs which are necessarily incurred in litigation which events demonstrate to have been unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and

(3) To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances that party should ordinarily bear the costs of litigation.

1. At the same time, as Redlich, J. said in OCBC,[87] there are other competing objectives of equal importance.

...Potential litigants should not be discouraged from bringing their disputes to the Courts. It is such considerations which underlie the general rule that an order for special costs should only be made in special circumstances.

1. In our view, these competing considerations can be sufficiently accommodated by applying a test of (un)reasonableness. The critical question is whether the rejection of the offer was unreasonable in the circumstances.[88] We see no justification for a more stringent test such as 'manifestly' or 'plainly' unreasonable.
2. Of course, deciding whether conduct is 'reasonable' or 'unreasonable' will always involve matters of judgment and impression. These are questions about which different judges might properly arrive at different conclusions. As Gleeson CJ said recently, 'unreasonableness is a protean concept'.[89] But a test of reasonableness is, we think, entirely appropriate to the exercise of a discretion such as this.

Factors relevant to assessing reasonableness

1. The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations.[90] It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;

(f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree's rejecting it.

1. It has been argued on occasion that the maker of a Calderbank offer should not be entitled to costs unless the offer sets out, with some reasonable specificity, the basis for the offeror's contention that the offeree should accept the compromise - for example, because the offeree's case was hopeless or because the offeree had no reasonable prospects of doing better in the proceeding than was being offered in advance.
2. Once again, we think it neither necessary nor desirable to lay down any general rule in this regard. We agree with what Redlich, J. said in OCBC, as follows:

Any attempt to prescribe the reasoning which must accompany [a Calderbank] offer should be resisted. Whether there is a need for the offeror to descend to specificity as to why the offer should be accepted must depend upon a consideration of all of the circumstances existing at the time of the offer. The extent to which the weakness of a party's position is exposed through the pleadings, affidavits and the various communications between the parties during the course of the litigation may bear upon the significance of the absence of specificity in the informal offer.[91]

1. As we said at the outset, the unreasonable refusal of an offer of compromise is, by itself, a proper ground for the award of indemnity costs or in the present case - the award of solicitor-client costs. It follows that it is not necessary for the applicant for such an order to establish matters which might be relevant to other, well-recognised, grounds for indemnity costs. Once again we would adopt what Redlich J said in OCBC, as follows:

It is not necessary to establish misconduct by the offeree before the rejection of the offer can be viewed as unreasonable. Lack of merit in the way a party has conducted its case is not a pre-requisite for the making of an indemnity costs order [on this ground].[92]

1. Nor is it necessary for the applicant offeror to show that the offeree acted with 'wilful disregard of known facts or clearly established law', or that it acted with 'high-handed presumption'.[93] We agree with Redlich J that such conduct is not a prerequisite for a finding that the rejection of a Calderbank offer was unreasonable.[94]

58 Further insight can be derived from the Court of Appeal's observations in Luxmore Pty Ltd v Hydedale Pty Ltd:[95]

[11] What was said by this Court in Hazeldene's Chicken Farm was meant to be of assistance to judges in approaching an application of this kind made consequent upon the rejection of a Calderbank offer. It would be wrong, however, to regard that decision as having prescribed a list of matters which must be taken into account in every case, such that a party failing to get a special order for costs could complain on appeal if one of the matters listed [26] of Hazeldene's Chicken Farm was not specifically adverted to. The reasons of the Court in Hazeldene's Chicken Farm make clear that this issue is, like every question of costs, quintessentially in the discretion of the trial judge and is to be assessed in the circumstances of the case.

[12] In the ordinary case, it is both appropriate and desirable that a costs question be decided at the conclusion of argument. Rarely will it be necessary for a judge to give detailed reasons for decision adverting to every matter debated in argument. This Court will assume, as should the parties, that every matter addressed in argument on costs has been considered. This Court will set its face against any proposition which would require judges disposing of questions of costs to give elaborate reasons.

59 It may be added that it is well established that the offeror bears the onus of establishing that the rejection of the offer was unreasonable and that a special order for costs should be made.[96]

60 As earlier mentioned, I do not accept the plaintiffs' submission that it has been established that Bates Australia's rejection of the Settlement Offer was unreasonable, or that it should result in a specific order that Bates Australia pay the plaintiffs' costs on and from 28 September 2018, on an indemnity basis. I elaborate as to why I have reached this conclusion in paragraphs 80 to 89 below. That being so, and having regard to the established principles and observations regarding costs that are referred to above, I turn now to consider the costs position with respect to the plaintiffs' claims and Bates Australia's counterclaim. In so doing, I proceed on the basis of the findings made in the Primary Reasons, and the previous orders made, to which I refer but will not set out here.

61 Briefly, the plaintiffs' claims were breach of contract claims seeking substantial damages, with the central allegations and core focus being that six months' notice of termination was not reasonable notice, and that Bates Australia should have given the plaintiffs three years' notice of termination.[97] These claims failed and, as Bates Australia noted, the plaintiffs rightly acknowledged in their written and oral submissions that they were the unsuccessful party in respect of their own claims.[98]

62 That being so, the position is straightforward. Costs should follow the event and the plaintiffs should pay Bates Australia's costs of and incidental to the plaintiffs' claims, to be taxed on a standard basis if not agreed.

63 Bates Australia brought a substantial counterclaim, both in terms of factual and other complexity, and quantum. The most substantial parts of it related to:

(a) its claims that various terms of what was said to be a standard form agreement (and some other implied terms) were terms of each of the Distribution Agreements;

(b) each of the various terms had been breached, and had caused Bates Australia substantial loss and damage;

(c) a claim for a permanent injunction restraining the plaintiffs from selling remaining Bates Australia stock on hand, which was based on the asserted existence, and a particular construction, of an alleged express term; and

(d) a substantial damages claims based on allegations that, over a period of years, each of the plaintiffs had failed to exercise admitted best endeavours and related obligations in connection with the marketing and sales of Bates Australia's products in their respective territories.[99]

64 These claims occupied a significant part of the trial and submissions. All of these claims failed.

65 The part of Bates Australia's counterclaim that did succeed[100] was its claim for debts owing in respect of stock supplied to the plaintiffs but not paid for. From the outset these debts were admitted by the plaintiffs to be owing, although the plaintiffs claimed that they were entitled to be set off against the alleged loss they claimed to have suffered as a result of Bates Australia's alleged breach of the Distribution Agreements by giving only six months' notice of termination.

66 Because the plaintiffs' claims failed, it was not necessary to address and determine the set-off contention in any detail, although it was the subject of submissions by the parties.

67 It was apparent from the plaintiffs' submissions that they recognised, correctly, that the costs outcome on the counterclaim needs to take account of Bates Australia's success on its debt claims. Similarly, it was apparent that Bates Australia recognised, correctly, that the costs outcome on the counterclaim needs to take account of Bates Australia's substantial failure on the other parts of its counterclaim. In essence, the difference between the parties lay in how that ought to be achieved.

68 A review of the pleadings, the extensive lay evidence, the complex expert evidence, the objections to evidence, the written openings, the examination and cross-examination of witnesses, the lengthy written closing submissions, and the oral closing submissions, reveals that the overwhelming majority of time, effort, and, one can infer, related expense, involved in the bringing and prosecution of the counterclaim was associated with those parts of the claims in the counterclaim that failed, which comprised the vast majority of the counterclaim. So much was forcefully submitted to be the case by the plaintiffs and not materially challenged by Bates Australia, as was appropriate in the circumstances. The position was and is quite clear in this regard.

69 That said, some time and expense was necessarily involved with the debt claims the subject of the counterclaim, including in connection with the small amount of evidence from Ms Finch regarding invoicing and relevant amounts. Although in substance the debts were admitted, it was still also necessary to address the precise quantum in the evidence, as Ms Finch did. In addition, effort and associated expense was required in relation to the consideration and making of submissions in relation to the set off contention, and some further time was involved in relation to the quantification of the debts at the end of the trial.

70 With these observations in mind,[101] and recognising that the exercise being undertaken is not one that is to be carried out with arithmetical precision, I have concluded that 5 per cent of Bates Australia's costs of and incidental to its counterclaim should be attributed to its claims in respect of the debts. Bates Australia was successful in respect of these debt claims and in this respect the costs of them ought to follow the event. The plaintiffs should pay 5 per cent of Bates Australia's costs of and incidental to its counterclaim, to be taxed on a standard basis if not agreed, which is an apportionment to take account of Bates Australia's success on this aspect of its counterclaim.

71 It was not submitted by the plaintiffs or Bates Australia that any amounts that should be paid by way of costs in respect of the debt claims ought to be split or addressed separately as between the plaintiffs. Given the manner in which the proceeding and the defence to counterclaim was conducted, this was an understandable and appropriate position to take.

72 Putting to one side the declaration regarding termination, which does not and should not materially feature in relation to the question of costs on the counterclaim, the plaintiffs were wholly successful in respect of the balance of the claims the subject of the counterclaim, which as I have said were substantial and occupied a large part of the lay and expert evidence, trial time, written submissions, and oral submissions. Because of the plaintiffs' success in respect of these claims, and mindful of the principles and observations regarding costs referred to earlier in these reasons, costs should follow the event in this regard.

73 Consequently, and subject to that which is addressed below regarding the July 2017 injunction application, Bates Australia should pay 95 per cent of each of the plaintiffs' costs of and incidental to the counterclaim, to be taxed on a standard basis if not agreed.

74 Having regard to how the proceeding advanced throughout its interlocutory stages and at trial, and the extent of the time, cost, steps and activities that were associated with those parts of the counterclaim in the proceeding that failed, on the limited evidence before me, this costs outcome in respect of the counterclaim does not readily lend itself to a sufficiently informed pragmatic or impressionistic wholly or partially netting off against the costs outcome in favour of Bates Australia in respect of the claim. Consequently, the need for taxation will not be able to be avoided if agreement cannot be reached between the parties. However, given the information regarding costs that is available to the parties but that is not before the Court, it appears that there will be considerable scope for reaching an agreed outcome.

75 I return to the July 2017 injunction application, in respect of which costs were reserved by Almond J.

76 Rule 63.22 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) operates to make reserved costs each parties' costs in the proceeding unless otherwise ordered. I propose to otherwise order.

77 The application was brought by Bates Australia in connection with its counterclaim, the relevant part of which failed. The interlocutory injunction has been discharged. Having regard to the outcome of that part of Bates Australia's counterclaim, the plaintiffs have been successful and should have their costs of and incidental to the injunction application, and Bates Australia ought not to recover any of its costs of this application. Consequently, and noting that which I have said regarding the plaintiffs being paid 95 per cent of their costs of and incidental to the counterclaim, the precise form of order will need to be crafted to address this additional aspect of the plaintiffs' costs of the counterclaim.

78 For completeness, I add two further observations. First, insofar as it was submitted that the plaintiffs' approach to the injunction application ought to result in a different outcome, I do not accept that submission. The plaintiffs were entitled to take the approach that they did. They expressly recognised the costs concerns and adopted a pragmatic approach whilst expressly reserving their rights. Their costs ought to form part of their costs of and incidental to the counterclaim - but of which they should be entitled to 100 per cent (not 95 per cent), to be taxed on a standard basis if not agreed.

79 Second, I consider the plaintiffs' submissions regarding Bates Australia's counterclaim being able to be inferred to have been tactical and their related contentions to be without persuasive force. In substance, Bates Australia's evidence on the topic amounted to little more than indicating that if a negotiated outcome of the kind sought at about the time the proceeding was commenced could have been achieved, then the counterclaim for damages would not have been brought. That said, I also do not accept that the circumstances are such that the counterclaim can be accurately characterised as 'defensive' in the way Bates Australia contended.

80 This brings me back to the Settlement Offer. It has not been established that Bates Australia's refusal of the Settlement Offer was unreasonable. It is sufficient to refer to the following matters.

81 The applicable principles are well known and I refer in this regard to paragraphs 57 to 59 above.

82 Although the offer contemplated the dismissal of the plaintiffs' substantial claims, it did not make provision for the payment of any of Bates Australia's costs of or incidental to the claims. It proposed that there be no order as to costs of the proceeding. Further, the offer required the vacation of previous costs orders. This included a previous costs order made in favour of Bates Australia in September 2018 in connection with the plaintiffs' application to amend its statement of claim.

83 Next, the offer with respect to payment of interest on the debts was far from clear. The debt claims related to undisputed invoices for United States dollar amounts. Because they involved foreign currency this necessarily gave rise to additional considerations in relation to interest and what a party's position might be. It was open and straightforward for the plaintiffs to make clear in the Settlement Offer what interest rate and currency was proposed and on what basis, which was both relevant and important in the particular and arguably unusual circumstances of this case.[102] As subsequent events have shown, the position with respect to foreign currency and interest is often not without complexity, which is not to suggest that the position can be looked at with hindsight. The complexities existed at the time the Settlement Offer was made and the offer did not articulate the proposed rate, currency or basis upon which paying interest was being offered. Whilst it is correct that Bates Australia could have sought to clarify the position, the fact that it did not do so does not in the present circumstances change the position or make the refusal unreasonable. Further, one can only speculate as to what response might have been forthcoming if such an inquiry had been made at that time, and as to how that may or may not have been responded to or impacted the position.

84 The Settlement Offer also did not make any provision for the recovery by Bates Australia of any part of Bates Australia's costs of the counterclaim in respect of the debts sought to be recovered from Weatherbeeta UK or the debts sought to be recovered from Weatherbeeta USA. This was so notwithstanding that the Settlement Offer involved paying those debt amounts, which would have reflected that part of Bates Australia's counterclaim being successful.

85 I do not accept that, on the evidence, it was open to infer from other communications and documents that the 'real reason', or a 'material reason' for rejecting the Settlement Offer was because it did not provide for the return of Bates Australia's stock, or because it operated in a way that permitted the plaintiffs to continue to deal with remaining Bates Australia stock on hand.

86 There was direct evidence from Bates Australia's Ms Finch regarding the reasons for not accepting the Settlement Offer.[103] Those reasons included: not specifying the amount, rate, period and currency of interest; not offering to make any contribution towards Bates Australia's substantial legal costs incurred by that time in defending the plaintiffs' claims, or in respect of any part of its counterclaim; and not offering to pay any of Bates Australia's costs in respect of the order made on 10 September 2018 in Bates Australia's favour regarding the amendment of the plaintiffs' statement of claim.

87 Ms Finch's direct evidence regarding the reasons the Settlement Offer was rejected did not raise the stock return issue. The evidence was not contradicted, Ms Finch was not cross-examined, and no application to cross-examine her was made.

88 In any event, even if it had been open to infer that this was one of the reasons why the Settlement Offer was refused, and it was assumed for the purpose of argument to be an unreasonable position, the existence of the other matters, whether taken alone, or whether they are considered together, or in any combination, are such that it would not have been established that the refusal of the Settlement Offer was unreasonable in the circumstances.

89 For completeness I add that, to the extent that Bates Australia relied upon the timing of the offer, and the period for which it remained open for acceptance, as supporting its position regarding the rejection of the Settlement Offer, those submissions were without force. There was sufficient opportunity for Bates Australia, a well-resourced and advised commercial litigant, to consider and respond to the Settlement Offer, and it also had the opportunity to seek additional time if desired. Further, it is far from unusual in commercial and other cases for settlement offers to be made in the lead up to, immediately before, or during trial. The without prejudice correspondence sent by Bates Australia's solicitors the following day containing its own offer, which offer remained open for a short time, further detracted from Bates Australia's submissions in this regard.

90 As I have said, it has not been established that Bates Australia's rejection of the Settlement Offer was unreasonable or that a special costs order of the kind sought by the plaintiffs is warranted or appropriate by reason of its rejection.

91 Given that the costs orders I propose to make include substantial costs orders in favour of Bates Australia in respect of the plaintiffs' failed claims, no order should be made at this point regarding the money paid into Court by the plaintiffs by way of security for costs unless agreement can be reached between the parties_._

Costs of the hearing and determination of these issues

92 I will hear submissions from the parties in relation to the costs of the hearing and determination of the issues the subject of these reasons.

93 As referred to in the Introduction and Summary above:

(a) Judgment for the amount of the debts, and interest, should reflect United States dollar amounts at the date of judgment, but be converted to Australian dollars as at that date.

(b) Interest on the debts should be allowed at the Commercial Rates and not the 10 per cent per annum interest rate fixed pursuant to the Rates Act.

(c) As to the costs of the proceeding:

(i) The plaintiffs should pay Bates Australia's costs of and incidental to the plaintiffs' claims in the proceeding up to and including 6 September 2019, to be taxed on a standard basis if not agreed.

(ii) The plaintiffs should pay 5 per cent of Bates Australia's costs of and incidental to Bates Australia's counterclaim in the proceeding up to and including 6 September 2019, to be taxed on a standard basis if not agreed.

(iii) Except for the costs of Bates Australia's application for interlocutory relief made by summons filed on 14 July 2017, Bates Australia should pay 95 per cent of each of the plaintiffs' costs of and incidental to Bates Australia's counterclaim in the proceeding up to and including 6 September 2019, to be taxed on a standard basis if not agreed.

(iv) Bates Australia should pay each of the plaintiffs' costs of and incidental to Bates Australia's application for interlocutory relief made by summons filed on 14 July 2017, to be taxed on a standard basis if not agreed.

(v) At this point no order should be made regarding the $330,000 paid into Court by the plaintiffs by way of security for costs.

94 The parties should provide the Court with a form of order to give effect to the conclusions expressed in these reasons.

[1] Weatherbeeta Limited v Hammersmith Nominees Pty Ltd [2019] VSC 559. Defined terms in the Principal Reasons have the same meaning in these reasons unless otherwise indicated.

[2] Being US$206,834.02 owing by the first plaintiff and US$157,935.90 owing by the second plaintiff.

[3] This was the rate fixed by the Attorney-General under section 2 of the Rates Act, with effect on and from 1 February 2017.

[4] As referred to in paragraph 14 of, and exhibit 'TB 10' to, the affidavit of Mr Bull affirmed 19 September 2019, but supplemented from the same source for the months of September and October 2019.

[5] See, for example: Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd [1998] VSC 91 (Vlasons) (Byrne J) [7] and [15]; Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2017] QSC 219 (Jackson J) [185]; BHPB v Cosco [2009] FCA 1448; (2009) 263 ALR 63) (Finkelstein J) [8]; Miliangos v George Frank (Textiles) Ltd (No 2) [1977] QB 489 (Bristow J) [497]; Maschinenfabrik Augsburg-Nurenburg AG v Altikar Pty Ltd (1984) 3 NSWLR 152; Swiss Bank Corporation v State Bank of New South Wales (1993) 33 NSWLR 63 (Giles J); New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350 (Priestley, Handley and Sheller JJA).

[6] Unreported, Supreme Court of Victoria (Fullagar J), 6 March 1990.

[7] [1998] VSC 135, [4]-[13] (Byrne J). Also referred to in Talacko v Talacko [2009] VSC 579 (Talacko), [4] (Kyrou J), and recently followed in Banks and Muscle Car Factory Pty Ltd v Puleo [2019] VCC 13 (Ryan J). Compare, for example, BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No. 4), [7] (Finkelstein J).

[8] However, it was emphasised that there was a difference between the parties regarding the rates of interest that should be applied.

[9] [1998] VSC 135, [4]-[13] (Byrne J). Although aspects of his Honour's judgment were overturned on appeal, the appeal did not relate to this issue. See Neuchatel Swiss General Insurance Co Ltd v Vlasons Shipping Inc [2001] VSCA 25, [60]-[63] (Ormiston JA, Callaway and Batt JJA agreeing at [64] and [65] respectively).

[10] The time at which each amount was payable was not in dispute. This was reflected in exhibit 'TB09' to Mr Bull's affidavit and exhibit 'AWS 11' to Mr Sutherland's affidavit.

[11] [2017] NSWSC 384 (McDougall J).

[12] [2009] VSC 579.

[13] Compounding monthly, as reflected in the spreadsheets comprising exhibits 'TB08' and 'TB09' to the affidavit of Mr Bull. The former applies the National Rate of 0.06 per cent and the latter applies the Rate Cap of 0.81 per cent.

[14] Affidavit of Mr Bull affirmed 19 September 2019 [11].

[15] Following some exchanges during the hearing it was not entirely clear if this submission was maintained.

[16] Reference was also made to s 2(2)(b) of the Rates Act and the obligation imposed on the Attorney-General after consultation with the Treasurer to consider whether the rate should be adjusted to include a penalty element, and to the observations of Elliott J in Ahrkalimpa Pty Ltd v Schmidt (No 4) [2019] VSC 246 (Ahrkalimpa)[10].

[17] Citing Hodgson v Amcor Ltd (No 9) [2012] VSC 205 (Hodgson) [36].

[18] Citing Minister for Environment, Energy and Climate Change v Morton [2017] VSC 774, [104] in the context of s 60 (Garde J).

[19] [2017] NSWSC 384.

[20] [2009] VSC 579 (Kyrou J).

[21] [1993] VicRp 81; [1993] 2 VR 382, 389-390, 394, 396-7 (Fullagar, Marks and JD Phillips JJ).

[22] Ibid [389] (Fullagar, Marks and JD Phillips JJ).

[23] Above n21, citations omitted. See also Hodgson [2012] VSC 205 [9]-[54] (Vickery J); Hosking v Ipex Software Service Pty Ltd (No. 2) (Habersberger J); John Beever (Aust) Pty Ltd v Paper Australia Pty Ltd (No 2) [2019] VSC 575, [38] (Lyons J); Batchelor v Burke [1981] HCA 30; (1981) 148 CLR 448, 455; MB.P. (SA.) Pty. Ltd. v. Gogic (1991) 171 CLR. 657, 663 and 666.

[24] (2005) 11 VR (568), [101]-[112] Ormiston JA (Buchanan and Eames JJA agreeing), but in a different context. See also Ahrkalimpa [10] (Elliott J).

[25] Clarke [1993] VicRp 81; [1993] 2 VR 382, 389-390, 394, 396-7 (Fullagar, Marks and JD Phillips JJ) [396]. As to the relevant aspect of s 60 of the Act, the Full Court appeared to accept that decisions on that section were applicable to s 58.

[27] [2000] HCA 42; (2000) 201 CLR 321, 328-329 [16].

[28] [2012] VSC 205, [36] (Vickery J) (emphasis added).

[29] Hartley Poynton [106]. The statutory rate is a 'benchmark' (Fullagar, Marks and JD Phillips JJ in Clarke [1993] VicRp 81; [1993] 2 VR 382, 389-390, 394, 396-7 (Fullagar, Marks and JD Phillips JJ)) and 'As a general rule, the starting point is the penalty rate ... the penalty rate is routinely awarded by the Court' (Hargrave J in Kalenik v Apostolidis (No 2) [2009] VSC 410, [78]).

[30] Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No. 3) [2003] VSC 244 [46].

[31] Above n21, Clarke [1993] VicRp 81; [1993] 2 VR 382, 389-390, 394, 396-7 (Fullagar, Marks and JD Phillips JJ).

[32] Kalenik v Apostolidis (No. 2) [2009] VSC 410, [78].

[33] And in aspects of their written submission in reply. See oral submissions at Transcript 28:6-30:8 (16 October 2019).

[34] (1993) 33 NSWLR 63, 65. But dealing with different statutory language.

[35] These reasons were cited with approval by the New South Wales Court of Appeal in State Bank of New South Wales v Swiss Bank Corporation (1995) 39 NSWLR 350 [360] (Priestley, Handley and Sheller JJA).

[36] [2009] VSC 410, [78]. In the context of s 60, but the observation applies equally, see for example Clarke [1993] VicRp 81; [1993] 2 VR 382, 389-390, 394, 396-7 (Fullagar, Marks and JD Phillips JJ) [396].

[37] His Honour also stated at [78] that:

'As a general rule, the starting point is the penalty rate. In practice, unless the defendant seeks to argue for a lesser rate, the penalty rate is routinely awarded by the court.'

[38] See, for example, paragraph 19 of the affidavit of Ms Finch sworn on 2 October 2019.

[39] See plaintiffs' written submissions filed on 19 September 2019 at [3.2] and plaintiffs' reply written submissions filed on 9 October 2019 at [1.1].

[40] The trial commenced one business day later, on Monday, 1 October 2019.

[41] And putting the Settlement Offer to one side for the moment. See Transcript 61:28-62:9 (16 October 2019).

[42] Bates Australia also referred to the 'success' in the obtaining of a declaration to the effect that the Distribution Agreements were validly terminated by the giving of six months' notice.

[43] Defendant's submissions on remaining issues filed on 2 October 2019 [6].

[44] Transcript 51:25-52:9 (16 October 2019).

[45] (2019) 372 ALR 117, 122; [2019] HCA 25, [24]-[25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).

[46] Donald Campbell & Co v Pollak [1927] AC 732, 811-812; Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 539-540, 557, 561-562, 569; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 96 [65], 120-121 [134].

[47] Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 [537]; [1986] HCA 17. See also [533].

[48] Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 541-542, see also 558‑559; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 96 [65], 121 [134].

[49] Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, 519; Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 [541]-[542], see also [558]; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 96 [65], 121 [134].

[50] Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [No 2] [1953] 1 WLR 1481 [1484]; [1953] 2 All ER 1588 [1590]. See also Harold v Smith [1860] EngR 516; (1860) 5 H & N 381, 385 [1860] EngR 516; [157 ER 1229, 1231]; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 96‑97 [66]-[67], see also 86 [35], 120-121 [134].

[51] See, eg, Bostock v Ramsey Urban District Council [1900] 2 QB 616, 622, 625 and 627; Ritter v Godfrey [1920] 2 KB 47, 53, 60 and 66; Scottish Gympie Gold Mines Ltd v Carroll [1902] St R Qd 311, 315-316; Stewart v Moore [1921] St R Qd 182, 190; Redden v Chapman [1949] NSWStRp 28; (1949) 50 SR (NSW) 24, 25.

[52] Anglo‑Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873, 874; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 97-98 [69].

[53] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 210 [90]; [2009] HCA 27. See Supreme Court Rules, r 1.10.

[54] [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA). Although the Court was addressing the costs of an appeal, as others have noted, such observations apply generally to costs questions arising at trial.

[55] Ritter v Godfrey [1920] 2 KB 47; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 97-8 (McHugh J); 124 (Kirby J).

[56] Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 63.04 at first instance and r 64.24 on appeal.

[57] Spotless Group Limited v Premier Building and Consulting Pty Ltd and Northern Suburban Properties Pty Ltd (Spotless) [2008] VSCA 115, [14].

[58] McFadzean v Construction Mining and Energy Union [2007] VSCA 289; (2007) 20 VR 250 (McFadzean) [157]-[158].

[59] Spotless [15]; Hughes v Western Australian Cricket Association Inc (1986) 8 ATPR 40-748, 48, 136; Pricom Pty Ltd v Sgarioto (Unreported, Supreme Court of Victoria, Eames J, 24 April 1995), McFadzean [2007] VSCA 289, [152].

[60] Major Engineering Pty Ltd v Helios Electroheat Pty Ltd (No 2) [2006] VSCA 114, [5].

[61] Currabubula Holdings Pty Ltd and Paola Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232, [90]. For a comprehensive analysis of the development of the 'rule of thumb', see [91]-[104]. See also Ellingsen v Det Skandinaviske Compani [1919] 2 KB 567, 569.

[62] PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24, [34].

[63] Spencer v Dowling [1996] VSC 51; [1997] 2 VR 127; Bass Coast Shire Council v King [1997] 2 VR 5, 29.

[64] Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd [1986] FCA 85; (1986) 10 FCR 177. See also Re Talk Finance and Insurance Services Ltd [1994] 1 Qd R 558 and Niml Ltd v Man Financial Australia Ltd (No. 2) [2004] VSC 510.

[65] [2016] VSCA 233, [13] (Tate and McLeish JJA and Ginnane AJA). See also Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2019] VSCA 169, where Maxwell P, Niall JA and Macaulay AJA, cited with apparent approval the observations of Tate and McLeish JJA and Ginnane AJA in Nom De Plume Nominees Pty Ltd v Fingal Developments Pty Ltd regarding a court taking a pragmatic approach in relation to costs where there is a multiplicity of issues and mixed success enjoyed by the parties.

[66] [2009] VSCA 233 [10] (Maxwell P, Redlich JA and Forrest AJA). See also Spotless Group Ltd v Premier Building and Consulting Pty Ltd (recs apptd) [2008] VSCA 115 [14] (Redlich JA).

[67] [2019] VSCA 199, [48]-[50] (Kyrou, McLeish and Emerton JJA).

[68] See also Civil Procedure Act 2010 (Vic) s 65C(1).

[69] Sangare [2019] HCA 25 [24] .

[70] Sangare [2019] HCA 25 [24].

[71] The passage omitted from the extract is the quote from Sangare set out in paragraph 53 above.

[72] See, eg, National Australia Bank Ltd v Horne [2011] VSCA 414 [3]; Apostolidis v Kalenik [No 2] [2011] VSCA 307; (2011) 35 VR 563, 612 [59]-[60]; Amalgamated Engineering Union v The Metal Trades Employers' Association [1935] HCA 61; (1935) 53 CLR 658, 664; Chiarella v Accident Compensation Commission [1992] VicRp 55; [1992] 2 VR 103, 108.

[73] See, eg, Board of Examiners v XY [2006] VSCA 190; (2006) 25 VAR 193, 201-3 [17]-[22], 208-9 [37]-[38]. Although the respondent in that case succeeded in overturning the decision of the Board of Examiners that she was not a fit and proper person to be admitted to legal practice, the Court held that the nature of the proceeding was such that no order as to costs should have been made.

[74] (2005) 13 VR 435, 440-443 [17]-[29](Warren CJ, Maxwell P and Harper AJA).

[75] [2000] VSC 163 per Gillard, J.

[76] [2001] VSC 274 per Ashley, J.

[77] [2002] VSC 30 per Ashley, J.

[78] [2003] VSC 136 per Dodds-Streeton, J.

[79] [2004] VSC 351 per Redlich, J.

[80] [1993] FCA 536; (1993) 46 FCR 225.

[82] See, for example, Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425.

[83] [2005] NSWCA 69 (17 March 2005).

[84] [2000] NSWCA 323, [37].

[86] (1992) 27 NSWLR 721, 724, see also M T Associates v Aqua-Max Pty Ltd (No. 3) [2000] VSC 163, [71].

[88] See, for example, Brymount [16]; Pearson v Williams [17]; OCBC (supra) [68] and the cases there cited.

[89] Re Minister for Immigration and Multicultural Affairs; ex parte Applicant S20/2002 (2003) 77 ALJR 1165,1170 [20].

[90] See House v R (1936) 55 CLR 499, 505.

[95] [2008] VSCA 212; (2008) 20 VR 481, 484; [2008] VSCA 212, [11]-[12] (Maxwell P and Kellam JA). In Chen v Chan [2009] VSCA 233, [17] Maxwell P, Redlich JA and Forrest AJA, observed that: 'The principles set out in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) do not need to be recited here. Whether the rejection of an offer is unreasonable will often depend as much upon the circumstances surrounding the offer at the time it was made as upon the terms of the offer and the end result. Critical in this case, in our view, is the position of each of the parties as set out in the pleadings at the time of the offer.' See also Midland Metals Overseas Pte Ltd v Powercor Network Services Pty Ltd [2019] VSCA 90, [18]-[19] (Tate JA and Almond AJA).

[96] See, for example, Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 [26] (Giles, Ipp and Tobias JJA); Midcoast Petroleum Pty Ltd v Keldros Pty Ltd (No 2) [2019] NSWC 1406 (Ward CJ in Eq); Ackerman v Morgan [2019] NSWSC 1250 (Walton J) [18]; Moggridge v The Benevolent Society (No 2) [2019] NSWSC 1115 (Harrison As J); SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 [37]; Jones v Bradley (No 2) [2003] NSWCA 258.

[97] As referred to in the Primary Reasons, this was reduced to 27 months by the end of the trial.

[98] See, for example, plaintiffs' written submissions filed on 19 September 2019 at [3.2] and the plaintiffs' reply written submissions filed on 9 October 2019 at [1.1] and [2.4]. It was not submitted that the making of the declarations that it was an implied term of each the Distribution Agreements that they could be terminated by either party upon the giving of reasonable notice altered the substance of this conclusion. Had such a submission been made it would not have been accepted.

[99] Which were the United Kingdom and the United States.

[100] That is not to overlook the declaration made to the effect that the Distribution Agreements were validly terminated. However, this followed from the dismissal of the plaintiffs' claim, noting also that a declaration was made on the plaintiff's claim that there was an implied term to the effect that each party could terminate the Distribution Agreements upon the giving of reasonable notice to the other party. Viewed as a matter of substance, these matters are minor in the costs context and ought not to obscure the substance of the position regarding success and failure - as the parties' submissions appeared to at least implicitly recognise.

[101] And conscious of the approach reflected in rule 63.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).

[102] That is not to suggest such a position would follow in a more straightforward case and one that did not involve foreign currency considerations.

[103] See, for example, paragraph 12 of the affidavit of Ms Finch sworn on 2 October 2019.